GST Cut: Hotel Rooms Up to ₹7,500 Tariff Cheaper from Sept 22

In a landmark decision set to energize the hospitality and tourism industry, the GST Council has announced that hotel rooms with daily tariffs up to ₹7,500 will now attract a reduced 5% GST rate (without input tax credit), effective September 22, 2025.

This change, coming just ahead of Navaratri, is expected to make travel more affordable, encourage domestic tourism, and boost India’s hospitality sector.

Cheaper Hotel Rooms Under New GST Regime

Currently, hotel rooms priced up to ₹7,500 per day are taxed at 12% GST with input tax credit. Under the new framework, the tax will drop to 5% without ITC, making stays more budget-friendly for travellers.

Industry experts believe this will lead to higher occupancy rates across hotels, especially in the mid-range segment, catering to both business and leisure travelers.

Key GST Council Decision

The GST Council, in its meeting held on Wednesday, approved a major overhaul of the indirect tax system by reducing and restructuring tax slabs. Effective September 22, 2025, only two slabs – 5% and 18% – will remain in place, simplifying the tax regime.

This date also coincides with the start of Navaratri, a peak travel and festive season, which is expected to further amplify the impact of this decision.

Industry Response and Impact on Tourism

Hospitality industry leaders have welcomed the move, calling it a “game-changer” for the tourism sector. The reduced GST rate is expected to:

• Encourage more domestic travel by lowering accommodation costs.

• Boost hotel occupancy rates in tier-1 and tier-2 cities.

• Make India more attractive for international travelers seeking affordable stays.

• Provide relief to small and mid-scale hotels that compete with alternative accommodations like homestays and rental platforms.

By making hotel stays cheaper, the reform aligns with the government’s vision to position India as a world-class travel destination.

Looking Ahead: A Boost for India’s Tourism Economy

With this decision, the government aims not only to stimulate tourism growth but also to provide a strong push to the hospitality and allied industries. As the festive season begins, travelers can look forward to more affordable trips, while hotels prepare for increased demand.

This GST reform, combined with India’s expanding infrastructure and tourism promotion initiatives, is poised to drive a new era of growth in the country’s travel and hospitality landscape.